The Midnight Sun Oil Pool is located in and adjacent to the Prudhoe Bay Unit ("PBU"). It was discovered in 1997 by the Sambuca No. 1 exploratory well (later renamed PBU MDS E-100), and confirmed in 1998 by the Midnight Sun No. 1 delineation well (later renamed the PBU MDS E-101). This pool comprises an accumulation of oil and gas trapped within the early Cretaceous-aged Kuparuk River Formation ("Kuparuk") that is common to, and correlates with, the interval from 11,662’ and 11,805’measured depth in PBU MDS E-100. The pool has low structural dip, good vertical permeability, contains a gas cap, and has gross reservoir sand thickness of about 110 feet.

Production from the pool began in October of 1998, and it peaked at an average rate of 12,673 barrels of oil per day (BOPD) in May 2002 from three wells. In April 2006, the average daily production rate peaked a second time at 7,896 BOPD with a 40% water cut and then began to decline. During the first nine months of 2011, the pool averaged 1,450 barrels of oil per day with 89% water cut from two producers (PBU E-101 and PBU E-102) that are supported by three water injectors (PBU E-100, PBU
E-103 and PBU E-104). The pool is developed on 80-acre spacing.

Geology:

The Midnight Sun Oil Pool lies north of the Prudhoe Bay Field in an area dominated by several major, east-trending, down-to-the-north normal faults that form grabens, half-grabens and horsts in a relay-ramp structural system. The structure at the top of the pool forms an elongate trough that measures about 3-1/2 miles in length, about one mile in width, and dips gently (less than 2°) to the northeast. This trough-like feature is bounded to the north by the Sambuca fault, to the west by the Prudhoe Mid-Field Fault, to the south by the Prudhoe Bay-bounding fault system, and to the east by an apparent stratigraphic pinch out against the North Prudhoe structural high. The top of the structure varies in depth from about 7,780’ to about 8,160’ true vertical depth below sea level.

Kuparuk River Formation (Kuparuk) sediments deposited and preserved between these bounding faults comprise the Midnight Sun Oil Pool. These sediments are complex, displaying rapid changes in thickness and facies along with local diagenetic cementation. At Midnight Sun, these sediments are informally divided into lower Kuparuk and upper Kuparuk units.

The lower Kuparuk unit is about 40’ thick, and is, in turn, subdivided into two lithologic intervals. The basal portion of this unit is discontinuous, tight, non-productive sandstone that ranges up to 5’ thick and contains abundant glauconite with minor occurrences of shale rip-up clasts. Overlying this thin discontinuous basal sandstone unit is a continuous, relatively uniform, very fine- to fine- grained, quartz-rich sandstone. Mean porosity and permeability in the reservoir-quality portions of the lower Kuparuk unit are 27% and 760 md, respectively, and average water saturation is about 12.5%. The overall relatively uniform thickness of the lower Kuparuk unit suggests that it was deposited prior to faulting.

The upper Kuparuk unit ranges from 0’ to 70’ in thickness, and it consists of poor to well sorted, glauconitic- and siderite-bearing sandstone interbedded with minor amounts of muddy siltstone. Changes in intergranular siderite cementation and compaction cause localized reductions in porosity and permeability. In the upper unit, mean porosity is 20.7%, mean permeability is 200 millidarcies, and average water saturation is about 26.5%. The variable thickness and lithology of the upper Kuparuk unit suggests influence by syndepositional faulting.

Structural and stratigraphic elements combine to trap the Midnight Sun Oil Pool. A gas-oil contact lies at 8,010’ true vertical depth subsea based on Repeat Formation Tester tool measurements. Heavy oil (10° API) was encountered below a true vertical depth of 8,107’ in well PBU E-101. The areal extent of this heavy oil accumulation is uncertain. No oil-water contact has been observed, but the reservoir is interpreted to lie significantly above the oil-water contact based on core and mercury injection capillary pressure data.